Rise in cost of living hits 10-year high

The RPI figure at the end of September was 3.2%, which is 1% higher than the previous quarter, and 1.8% more than the same time last year.

The increase was not unexpected, with concerns about staff shortages fuelling pay rises and inflation, particularly in the construction and hospitality industries.

The official update shows that nearly everything has become more expensive over the past few months, with price hikes almost across the board.

Thirteen of the fourteen categories analysed showed price surges, with the biggest jump in property rents, DIY goods, petrol and diesel, air fares, bicycles, and household services such as school and nursery fees.

Prices are rising at the supermarket, with increases in items such as bread, fizzy drinks, vegetables and meats.

The only category which showed a drop in inflation was leisure services, which was put down to the seasonal change in accommodation costs both on- and off-island.

RPIX, which is the inflation measure that excludes mortgage interest payments, was marginally higher at 3.3%.

The update was particularly bad news for pensioners, who are set to receive just a 2.4% increase in the States pension from January.

Dave Newman, chairman of the Confederation of Guernsey Industry, said that staff shortages had a knock-on effect on the prices consumers pay.

‘One of the problems caused by the acute labour shortage is that it encourages companies to poach staff and they offer higher rates of pay in order to attract them. They then have to pass those costs on to the consumer and that’s inflationary,’ he said.

Inflation was highlighted in the recent Budget report as a risk to the island’s strong recovery from the pandemic, with some of the recent gains under threat of being derailed.

The inflation figures are collated and published by the States’ data and analysis team, using a ‘shopping basket’ of more than 1,700 items, and it aims to be a representation of what typical consumers in a Guernsey household spend their money on.

In comparison, Jersey’s most recent RPI figure is 2.9%, but in the UK it is 4.9%.

Typically inflation in the three jurisdictions follows broadly the same trends.